“Good ship”, despite the fateful record, seems ready to sail again for Federal Reserve.
Economic expectations The central bank was issued on Wednesday It indicates that although officials see that inflation is moving this year more quickly than expected, they expect the trend to be short -term. Machine expectations again “Temporary” inflation This caused a major political headache to study the federal reserve.
At his news conference after the expression, president Jerome Powell The current expected said that any price that jumps from definitions will likely be short -term.
In response to a question about whether the Federal Reserve “returned to the institution again,” the central bank leader replied, “So I think this is a kind of basic issue. But as I said, we cannot really know this. We will have to see how things really succeed.”
However, the expectations of the Federal Open Market Committee, with inflation by 2.8 % in 2025, but quickly declining to 2.2 % and then 2 % in the following years, indicates that officials do not expect a permanent burden of definitions.
“It may be appropriate sometimes to look through inflation, if it will disappear quickly, without action on our part, if it is temporary,” Powell said. “This may be the case in the case of customs tariffs. I think this will depend on the inflation of the tariff that moves somewhat quickly, as well as, as well as on the expectations of inflation well.”
Powell added that although feelings of feelings show that some short -term inflation indicators have risen, market measures for long -term expectations are good.
Fears of definitions
This position is important with the markets concerned that President Donald Trump's tariff can raise a broader global trade war that would make inflation a problem for the American economy. It seems that inflation was heading this year, but the outlook is now lower.
Again in 2021, when inflation for the first time increased to the goal of the Federal Reserve by 2 %, Powell and his colleagues said again and again. They expected the step to be temporary,, Which was brought by Covid's factors that affect the supply and demand that is eventually fading. However, inflation continued to rise, eventually reached 9 % as measured by the consumer price index, and the Federal Reserve was forced to respond to a series of high aggressive interest rates that have not been seen since the early eighties.
In a speech last August at the annual Jackson Hall summit in the Federal Reserve, Powell joking “The Good Ship Transitiony was crowded”, and the attendees told that “I think I see some of his former colleagues there today.”
The Chamber laughed in Powell's comments, and the market on Wednesday does not seem to be in temporary talk. The stocks jumped as Powell spokeand Dow Jon's industrial average 383 points were closed to 41,964, a reflection of the market wealth in a recent decrease.
“The” transit “, or at least this was the hint. “The market reaction, for me, says that investors are ready to believe that customs tariffs and other policies will not create permanent innovative pressure and that the Federal Reserve can remain in control.”
Federal Reserve Voice Keep the standard interest rate waiting Because it weighs the impact of tariffs and financial policy from Trump. In addition, officials of the Federal Open Market Committee indicated that other percentage rate discounts can be on the road this year, though Powell warn again This policy is not closed, nor the temporary inflation view on the definitions.
“We will watch all of this very carefully,” he said. “
